Bank Nationalization Research Articles

A Study on Fifty Years Journey of Bank Nationalization: Special Reference to Agricultural Credit

A Study on Fifty Years Journey of Bank Nationalization: Special Reference to Agricultural Credit

ECONOMIC PREREQUISITES FOR DEVELOPMENT OF FINANCIAL AND CREDIT SYSTEM IN UKRAINE: SOCIO-HUMANITARIAN DISCOURSE IN CONTEXT OF SOCIAL TRANSFORMATION

The topic of the present paper is a search for the functional methods of bank management in the period of political and social transformation of society. The objective of the research is substantiation of the necessity for the government to have its own banks in order to exercise its functions and provide guarantees of stability in the state under the unfavorable conditions of a conflict of interests when the state is both the ‘regulator of the financial services market’ and the ‘bank owner’.The analysis conducted in the paper on the benefits and losses due to the state ownership of banks has shown: vulnerability of the Ukrainian banks to political pressure; lobbying for the interests of systemic commercial banks and their obtaining of preferences or special terms; excessive budget expenditures for capitalization of failing systemic banks.The experience of developed economies has been researched with an analysis of shortcomings, mistakes and prospects of state-owned bank management in different countries; banking market regulation methods and tools have been systematized. The paper focuses on the measure of nationalization, which was applied by many advanced countries; the impact of nationalizing important systemic banks is grounded, with an emphasis on the decisive role of nationalization in the transition period. It has been determined that many of the factors leading to bank nationalization are closely related to the problems of government regulation of the banking sector.A conclusion has been made that in many countries the mechanisms for corporate regulation of state- or community-owned property do not even exist or are underdeveloped, and therefore, the governments of these countries, having sufficient information and appropriately trained specialists, should be responsible for all the socio-economic processes in the state. These considerations should be translated into elaboration of a mechanism for corporate governance of strategic public property objects. A corporate governance reform involves creation of competent and independent supervisory boards that would minimize a possible impact of politicians and public officials on the operating activities of banks.

Deposit Insurance, Bank Ownership and Depositor Behavior

We employ proprietary data from a large bank to analyze how – in times of crisis – depositors react to a bank nationalization, re-privatization and an accompanying increase in deposit insurance. Nationalization slows depositors fleeing the bank, provided they have sufficient trust in the national government, while the increase in deposit insurance spurs depositors below the new 100K limit to deposit more. Prior to nationalization, depositors bunch just below the then-prevailing 20K limit. But they abandon bunching entirely during state-ownership, to return to bunching below the new 100K limit after re-privatization. Especially depositors with low switching costs are moving money around.

The Politics of Democratizing Finance: A Radical View

How can finance be durably democratized? In the centers of financial power in both the United States and the United Kingdom, proposals now circulate to give workers and the public more say over how flows of credit are allocated. This article examines five democratization proposals: credit union franchises, public investment banks, sovereign wealth funds, inclusive ownership funds, and bank nationalization. It considers how these plans might activate worker and public engagement in decision making about finance by focusing on three modes of public participation: representative democracy, direct democracy, and deliberative minipublics. It then considers the degree to which democratization plans might be resilient to de-democratization threats from business. It argues that of the five, bank nationalization goes furthest in guarding against de-democratization threats but is still pocked with pitfalls if it relies solely on representative democracy. It argues that two criteria appear necessary for democratically durable alternatives: the active direct participation of workers and citizens and the weakening of businesses’ capacity for democratic retrenchment.

Fifty Years of Bank Nationalization: Phase Wise Policy and Progress of Indian Banking

Fifty Years of Bank Nationalization: Phase Wise Policy and Progress of Indian Banking

"Status of Pradhan Mantri Jan Dhan Yojna In Uttarakhand : An Initiative under Financial Inclusion"

The irony of the Indian growth story is that where on one hand, a certain proportion of the population is enjoying the accessibility of banking services; on the other hand, another segment remains underprivileged. The lower income strata are totally deprived of even basic financial services. Though banking industry is growing both horizontally and vertically, in spite that the penetration of branches in rural areas does not match with the rising demand and the need for accessible financial services. Even after decades of Bank nationalization, the country is still struggling for the access of financial services and still a large proportion of the nation depends on money lenders or the informal sector who are continuously exploiting the poor. In this regard, many initiatives have been taken by the government to include the exclusions. PMJDY launched in 2014 is one of such initiative. This paper attempts to put forth the status of Pradhan Mantri Jan Dhan Yojna, an initiative under financial inclusion.

Does government intervention affect banking globalization?

Using data from British and American banks, we provide empirical evidence that government intervention affects the global activities of individual banks along three dimensions: depth, breadth and persistence. We examine depth by studying whether a bank's preference for domestic, as opposed to external, lending (funding) changes when it is subjected to a large public intervention, such as bank nationalization. Our results suggest that, following nationalization, non-British banks allocate their lending away from the UK and increase their external funding. Second, we find that nationalized banks from the same country tend to have portfolios of foreign assets that are spread across countries in a way that is far more similar than those of either private banks from the same country or nationalized banks from different countries, consistent with an impact on the breadth of globalization. Third, we study the Troubled Asset Relief Program (TARP) to examine the persistence of the effect of large government interventions. We find weak evidence that upon entry into the TARP, foreign lending declines but domestic does not. This effect is observable at the aggregate level, and seems to disappear upon TARP exit. Collectively, this evidence suggests that large government interventions affect the depth and breadth of banking globalization, but may not persist after public interventions are unwound.

Does Government Intervention Affect Banking Globalization?

Using data from British and American banks, we provide empirical evidence that government intervention affects the global activities of individual banks along three dimensions: depth, breadth and persistence. We examine depth by studying whether a bank's preference for domestic, as opposed to external, lending (funding) changes when it is subjected to a large public intervention, such as bank nationalization. Our results suggest that, following nationalization, non-British banks allocate their lending away from the UK and increase their external funding. Second, we find that nationalized banks from the same country tend to have portfolios of foreign assets that are spread across countries in a way that is far more similar than those of either private bank from the same country or nationalized banks from different countries, consistent with an impact on the breadth of globalization. Third, we study the Troubled Asset Relief Program (TARP) to examine the persistence of the effect of large government interventions. We find weak evidence that upon entry into the TARP, foreign lending declines but domestic does not. This effect is observable at the aggregate level, and seems to disappear upon TARP exit. Collectively, this evidence suggests that large government interventions affect the depth and breadth of banking globalization, but may not persist after public interventions are unwound.

Clearing the Cupboard: The Role of Public Relations in London Clearing Banks’ Collective Legitimacy-Seeking, 1950–1980

This essay conceptualizes and historically documents a negle cted trade association function: legitimacy-seeking. It uses the Committee of London Clearing Bankers case to show how an association can, by using manipulative public relations techniques, fulfil that function for its members. To the circumstances that prevent rent-seeking associations from becoming industry level efficiency enhancers, the essay adds a new factor—a political legitimacy crisis. Through the Committee, the banks’ leaders responded to such a crisis in the 1970s prompted by the threat of bank nationalization. The case yields the following generalizable point. When members are faced with an external legitimacy threat, a trade association, even one with a history of collaborative learning, can get stuck at the rent-seeking end of the associational spectrum. By morphing from a cartel into merely a vehicle for asserting its members’ political legitimacy through instrumental public relations, this is just where the Committee remained on that continuum.

Clearing the Cupboard: The Role of Public Relations in London Clearing Banks’ Collective Legitimacy-Seeking, 1950–1980

This essay conceptualizes and historically documents a negle cted trade association function: legitimacy-seeking. It uses the Committee of London Clearing Bankers case to show how an association can, by using manipulative public relations techniques, fulfil that function for its members. To the circumstances that prevent rent-seeking associations from becoming industry level efficiency enhancers, the essay adds a new factor—a political legitimacy crisis. Through the Committee, the banks’ leaders responded to such a crisis in the 1970s prompted by the threat of bank nationalization. The case yields the following generalizable point. When members are faced with an external legitimacy threat, a trade association, even one with a history of collaborative learning, can get stuck at the rent-seeking end of the associational spectrum. By morphing from a cartel into merely a vehicle for asserting its members’ political legitimacy through instrumental public relations, this is just where the Committee remained on that continuum.

A Discursive Dominance Theory of Economic Reform Sustainability: The Case of India

This article hypothesizes that economic reforms become sustainable when the discursive conditions prevailing in society tip against the existing paradigm under exceptional circumstances. Thus, unless the pro-liberalization constituencies dominate the development discourse, economic reforms, initiated under the exigencies of crisis and conditionalities, or carried out by a convinced executive with or without the stimulus of a crisis, will be reversed. The discursive conditions are determined based on eight factors: the dominant view of international intellectuals, illustrative country cases, executive orientations, political will, the degree and the perceived causes of economic crisis, attitudes on the part of donor agencies, and the perceived outcomes of economic reforms. The paper seeks to prove this “discursive dominance” hypothesis for the Indian case through a cross-temporal, comparative review of the evolution of economic policy in India over six different phases.

Lessons from the Nationalization Nation: State-Owned Enterprises in France

With a steep recession in full swing, it’s French-bashing time again on the editorial pages and in the business sections of American newspapers. As the Obama administration frantically weighed policy options, pundits agonized over the prospect of the U.S. government’s taking stakes in banks, and automakers contemplated France with a mix of horror and resignation. When, last February, the Washington Post dared a tentative endorsement of government takeovers, it did so apologetically, reassuring its readers that it shared their distaste for Gallic planning: “We can understand why talk of bank nationalization freaks out the stock market: The very notion is so, well, French.” The New York Times’s economics columnist David Leonhardt called for temporary nationalizations, but he took pains to distinguish them from the nefarious takeovers inflicted by leftist ideologues.

Non-Performing Assets (NPAs) in Banks:Causes, Stress and Remedies

With the liberalization of economy, the banking industry is facing enormous challenges in the open financial market, probably it is also giving rise to non-performing assets (NPAs) in banks. The concept of bank nationalization was misutilised by a certain group of people in the name of liberalization, having directly contributing to swelling NPAs. The origin of the problem of NPAs also lies in the quality of credit risk management of banks. The increasing NPAs have a direct impact on banks profitability, causing concern and building up stress on management and the employees. In this paper, an attempt has been made to focus on the potential factors / causes of NPAs, stress and their remedies by suggesting certain strategic approaches to provide an optimal level of stress environment to help in maintaining a balance in their different domains of work life.

Public sector banking, efficiency and economic growth in India

This paper develops a framework that integrates Harrod-Domar growth model and McKinnon-Shaw Hypothesis via Molho's dynamic adjustment mechanism. The model is used to determine the impact of bank nationalization through aggressive bank branch expansion programs and priority sector credit allocation on India's financial savings, investment, productivity and GDP. The empirical findings indicate that the bank nationalization policy has been a mixed blessing. The aggressive bank branch program since 1969 resulted in an increased in savings, investment, productivity of capital and GDP, however, the priority sector credit allocation policy did not fully achieve its desired goals.

Mexican Bank Nationalization

The rapid unfolding of events in Mexico since 1982 has made it difficult to gain some historical distance and take a more reflective view of the dramatic reshaping of the Mexican economy and society. This is probably one of the more important contributions of Russell White's book. By taking a long-term historical approach to the creation and transformation of the Mexican banking system (from colonial to the most recent times), White is able to present a comprehensive perspective not only on the banking system's functioning within the economy but also on the complex and deep-rooted interrelationship of commercial, bank, and financial capital vis-a-vis the Mexican state. The focus of White's interest is the developing hegemony of financial capital and the struggles within the Mexican state among various fractions of the bourgeoisie. Jos6 L6pez Portillo's nationalization of the banks in 1982 called into question the hegemony of finance capital and accentuated the political struggle within the power bloc of class fractions holding state power over the basic nature of Mexico's development strategy. White's analysis becomes particularly interesting when he focuses on the Porfiriato, when foreign bank capital rose to ascendency and severely constrained the relative autonomy of the Mexican state. During the first period of postrevolutionary finance, from 1920 to 1940, foreign ownership of the banking system was progressively replaced by national and state ownership. An alliance took shape between the public bureaucracy and the increasingly powerful private bankers, with the state still dominating the financial circuits in the name of a revolutionary program of development. During the second period of postrevolutionary finance, from 1940 to 1970, the power of bank capital began to outstrip that of the state, and government finance became increasingly privatized. In the 1970s the crisis of the Mexican state coincided with the ascendency of finance capital. White claims that the coincidence of interests

The International Political Economy of Bank Nationalization: Mexico in Comparative Perspective

“In the last two or three years, … a group of Mexicans …, supported and advised by the private banks, has stolen more money from our country than the empires that have exploited us since the beginning of history…. They've robbed us …, but they will not rob us again.” With these words, President López Portillo nationalized Mexico's private banks and imposed controls on foreign exchange. Many of those attending this State of the Union address on 1 September 1982 stood to applaud, while the president cried and one banker fainted. Mexico's chief of state continued, “The revolution will speed up; the state will no longer be intimidated by pressure groups.”

Policymaking in Mexico: from boom to crisis

This book is a study of economic policymaking in Mexico focusing upon the sexenio (the six-year term) of Lopez Portillo—the era of the petroleum boom, the 1982 economic crisis, and the eventual bank nationalization.

Factional Politics and Economic Policy: The Case of India's Bank Nationalization

IN THE FEBRUARY 1967 general elections, the Congress Party of India experienced the worst electoral defeat in its history. It lost to the united front coalitions of non-Congress parties in ten of the 17 states into which the Indian Union was then divided while, at the Center, its majority was greatly reduced. Paradoxically enough, this stunning defeat was an ill-disguised benefit for the leader of the Congress Party in Parliament, Prime Minster Indira Gandhi. Mrs. Gandhi had been elected (in 1966) to the prime ministership thanks to the efforts of a combine of party bosses who derived their conspicuous power by the control of the party machine at the local level. This group-the as it was popularly called-had come together not on the basis of a common political program, but to block the road to power of one of their own kind, Morarji Desai. Leader of the party in Gujarat and a former Union Finance Minister, Desai was well known, and accordingly feared, for his dictatorial character. In 1966 the Syndicate had sponsored the election of Indira Gandhi, favored by the left of the party. The Syndicate considered Mrs. Gandhi a secure asset in the forthcoming elections because she was the only heir of the late Jawaharlal Nehru and a person then considered easy to influence. However, Indira Gandhi very quickly proved her mettle by pursuing her own policies and relying on her own advisers, without taking any account of the Syndicate's wishes. But, largely because of her politically expensive decision to devalue the rupee, her position had been greatly weakened in the months before the general

Factional Politics and Economic Policy: The Case of India's Bank Nationalization

Factional Politics and Economic Policy: The Case of India's Bank Nationalization

Bank Nationalization in India

Bank Nationalization in India